Sugar Price Supports Should Be Abolished

JACK NEASE Commentary

It's fun to write about Big Sugar costing U.S. taxpayers so much money. It's fun to write about sugar barons making millions from a program that keeps sugar prices high.

And it's fun to write about all the White Knights in a reform-minded Congress finally ready to do away with this dreadful program. I've written my share of such stuff.

But the situation, alas, is more complex. If the program is to be abolished, it is time to be very clear about what it is and what it is not.

In its fight to preserve price supports, Florida's sugar industry has one argument that usually wins: The program doesn't cost taxpayers money.

This argument is almost true. When things go well, the program doesn't cost anything more than administrative costs.

In most years, the loans the government makes corporate sugar growers are repaid with interest. The loans are, in effect, the grower's way of getting the government to keep prices high.

If the price of raw sugar falls below specified support prices (now about 18 cents a pound), growers may forfeit crops produced with these loans. The government then resells the sugar at a loss.

The rich keep getting richer

This has happened only once in recent times. In 1984, the price of sugar fell below support prices and some major growers forfeited crops. The cost to taxpayers was $77 million.

In 1985, the law was rewritten to require the program be administered without cost to taxpayers. This has been done by manipulating sugar import quotas to keep supplies low.

Such manipulation harms U.S. efforts to improve economies of Caribbean nations. U.S. growers argue it is more important to benefit the economy of South Florida.

That brings us to the second argument of the sugar lobbyists: The program benefits many people. It's not just a program for sugar barons.

There's an element of truth in that argument, too. Roughly half of the stock in United States Sugar, the state's largest single sugar operation, is employee owned. Part of its profits go to hundreds of mill workers, technicians, secretaries, tractor operators and such.

But the biggest beneficiary of the price support program is Alfonso Fanjul, a authentic sugar baron. He's a multimillionaire (perhaps billionaire) who lives in Palm Beach and sits on several corporate boards.

He and his family own two large sugar plantations in South Florida and extensive sugar operations overseas. It is the thought of further enriching the Fanjuls of the industry that gives reformers their most forceful argument.

Environmentalists enter picture

Environmentalists have strong arguments against the sugar industry, too. Phosphorous runoff from sugar fields has caused huge damage to the area. Eliminating the price-support program, however, would not restore the area to pristine beauty.

As the debate about eliminating the price support unfolds, it's wise to keep in mind who will benefit most by lower sugar prices. The big beneficiaries will be Coca-Cola and other softdrink bottlers, Hersey and other candy manufacturers, and other big commercial users of sugar.

The price of table sugar won't change much. Even this small change is a good reason to abolish the program, however. Price supports are incompatible with a free market economy.

The price-support program is a bad program. It should be abolished. But let's not forget there are a lot of good people in Florida's sugar industry.

They and South Florida's sugar operations will survive if sugar prices drop. The profits of a few will be considerably lower.

Sun-Sentinel columnist Jack Nease comments on business and economic issues affecting South Florida on Sunday, Tuesday, Wednesday and Thursday.